The end of compulsory retirement

The Government has decided to abolish the compulsory retirement age.

News of this change caused controversy, and claims abounded that the Government wanted to squeeze the workforce to help balance the shortfall in pensions. It seemed we would all have to work longer to make up for the Treasury’s mistakes.

But what will this mean for workers and HR departments in practice?

Robin Ellison, a pensions expert and partner at law firm Pinsents, said retirement ages would have to go up in the UK, especially now that people live longer.

“Sacking the old annoys and insults them,” he said. “Older people might well want to stay on in a more junior job for less money.

“But HR people tend to be the least open to changes in culture – keeping older people on annoys HR because they like consistency. This culture is changing.”

David Smith, Asda’s HR director of people, said people needed a different mindset and to ñstart thinking in a different placeî.

Asda is already a major employer of older workers and as such welcomes the end of compulsory retirement.

“At Asda, we don’t have a retirement age, and employ lots of over-50s,” he said. “It’s a very lively labour market and employing older workers is excellent.

“The traditional prejudice is that the old will take time off whereas the young will not. We in fact find the opposite to be the case.”

This age prejudice can lead to businesses losing out on a major source of expert personnel.

“There are hundreds of productivity surveys out there showing the old as being productive,” said Michele Lewis, the TUC’s pensions officer. “Most importantly, these older workers are experienced, and we should give the best opportunities to old and young alike.”

However, the Confederation of British Industries (CBI) remains in favour of the fixed retirement age.

“The danger is of getting to the point where leaving a company will become a point of acrimony and dispute, rather that something that can happen harmoniously and smoothly,” said a spokesman for the CBI.

It maintains that the number of employment tribunals is likely to increase as employees contest being sacked on the basis of age.

“There would be uncertainty, and the employer would have to make a case for an employee’s unsuitability – HR departments would be in the thick of that.”

A massive pension black hole, an ageing population and a declining birth rate constitute a serious problem for the domestic employment market.

The abolition of the retirement age may help to lessen the effects of these three factors. However, it could end up by souring the relationship between employers and their older employees.

It will fall to HR departments to ensure that this is not the case.